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Linda Yueh, the BBC's chief business correspondent, notes that AstraZeneca is a key UK firm in the area of research and development (R&D) and also in exports.

"AstraZeneca's £7bn of drugs sold every year accounts for a whopping 2.3% of British goods exports," she added.

Pfizer has made other major acquisitions, its most recent being the $68bn (£40.4bn) purchase of Wyeth in 2009.

However, this would mark its biggest foreign acquisition.

It would also be the largest foreign takeover of a British firm, beating some of the more recent deals which include:

O2 bought by Spain's Telefonica for £18bn in 2005

Cadbury bought by US-based Kraft for £11.5bn in 2010

Alliance Boots bought by US investment firm KKR for £11.1bn in 2007

BAA bought by Spain's Ferrovial for £10.3bn in 2006

Powergen bought by Germany's E.on for £9.6bn in 2002

However, the BBC's business editor, Kamal Ahmed, warned Pfizer's takeover approach could turn into a lengthy battle.

"If AstraZeneca does not engage, and it hasn't so far, this bid could turn hostile," he said.

Reacting to news of the bid, Business Secretary Vince Cable said: "My priority is to ensure that the objectives of this government's life sciences industrial strategy are fulfilled. This means ensuring there are high-skilled jobs and long term investment in research and development in the UK.

"On the potential merger, the CEO of Pfizer has made contact and informed me of his intentions and I have emphasised the importance of these points."

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